SINGLE AUDIT
OF THE
STATE OF NEW HAMPSHIRE
FOR THE FISCAL YEAR ENDED
JUNE 30, 2001

November
2002 A-77-03-00002

MANAGEMENT
ADVISORY REPORT

Mission

We improve SSA programs
and operations and protect them against fraud, waste, and abuse by conducting
independent and objective audits, evaluations, and investigations. We provide
timely, useful, and reliable information and advice to Administration officials,
the Congress, and the public.

Authority

The Inspector General Act
created independent audit and investigative units, called the Office of Inspector
General (OIG). The mission of the OIG, as spelled out in the Act, is to:

Conduct and supervise independent
and objective audits and investigations relating to agency programs and operations.
Promote economy, effectiveness, and efficiency within the agency.
Prevent and detect fraud, waste, and abuse in agency programs and operations.
Review and make recommendations regarding existing and proposed legislation
and regulations relating to agency programs and operations.
Keep the agency head and the Congress fully and currently informed of problems
in agency programs and operations.

To ensure objectivity,
the IG Act empowers the IG with:

Independence to determine
what reviews to perform.
Access to all information necessary for the reviews.
Authority to publish findings and recommendations based on the reviews.

Vision

By conducting independent
and objective audits, investigations, and evaluations, we are agents of positive
change striving for continuous improvement in the Social Security Administration's
programs, operations, and management and in our own office.

Subject: Management Advisory
Report on the Single Audit of the State of New Hampshire for the Fiscal Year
Ended June 30, 2001 (A-77-03-00002)

This report presents the
Social Security Administration's (SSA) portion of the single audit of the State
of New Hampshire for the Fiscal Year ended June 30, 2001. Our objective was
to report internal control weaknesses, noncompliance issues, and unallowable
costs identified in the single audit to SSA for resolution action.

KPMG LLP performed the audit.
The Department of Health and Human Services' (HHS) desk review concluded that
the audit met Federal requirements. In reporting the results of the single audit,
we relied entirely on the internal control and compliance work performed by
KPMG LLP and the reviews performed by HHS.

For single audit purposes,
the Office of Management and Budget assigns Federal programs a Catalog of Federal
Domestic Assistance (CFDA) number. SSA's Disability Insurance (DI) and Supplemental
Security Income (SSI) programs are identified by CFDA number 96. SSA is responsible
for resolving single audit findings reported under this CFDA number.

The New Hampshire Disability
Determination Services (DDS) performs disability determinations under SSA's
DI and SSI programs in accordance with Federal regulations. The DDS is reimbursed
for 100 percent of allowable costs. The New Hampshire Department of Education
is the New Hampshire DDS' parent agency.

The State did not adhere
to the clearance method timetable in the Cash Management Improvement Act (CMIA)
agreement when drawing Federal funds (see Attachment). The corrective action
plan indicates that they will work to ensure the efficient transfer of funds
and will continue to monitor agency draw downs of funds.
We recommend SSA ensure that the State has implemented procedures for drawing
Federal funds in accordance with the clearance pattern timetable in the CMIA
agreement.

Please send copies of the
final Audit Clearance Document to Mark Bailey in Kansas City and Paul Wood in
Baltimore. If you have questions contact Mark Bailey
at (816) 936 5591.

St
Steven L. Schaeffer

Attachment

STATE OF NEW HAMPSHIRE
FISCAL YEAR 2001 SINGLE AUDIT

SCHEDULE OF COMPLIANCE FINDINGS
AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2001 (CONTINUED)

Finding:
The Cash Management Improvement Act of 1990 (CMIA) is intended to improve the
transfer of federal funds between the federal government and the states, territories
and the District of Columbia by minimizing the time between the transfer of
funds to the states and the payout for the program purposes and ensuring the
federal funds are available when requested.

The State of New Hampshire
uses the dollar weighted average clearance method to determine the date federal
funds are requested from the awarding agencies. The requirement under Treasury
Regulation 31 CFR part 205.7(c)(3) states that a state shall request funds one
business day prior to the dollar weighted average number of days required for
funds to be paid out after a disbursement, and a federal agency shall deposit
funds in a state account the next business day after receiving a request for
funds.

Certain New Hampshire State
agencies have been requesting funds from the federal agencies later than required,
sometimes up to ten days late. We noted that 6 of 30 (20%) cash draws tested
were initiated two to ten days later than required. Deviation from the agreed
upon average clearance patterns results in the disruption of the efficient transfer
of funds between the federal government and the State. Late drawdowns are also
an inefficient way to manage cash.

A similar finding was noted
in the fiscal year 2000 Single Audit report.

Questioned Costs: None

Recommendation:
We recommend that State agencies adhere to the timetable under the average clearance
method when requesting reimbursement from its federal awarding agencies.

Auditee Corrective Action
Plan:
Treasury concurs and understands the importance of efficient transfer of funds
from federal awarding agencies to State agencies. The NH Integrated Financial
System CMIA module provides the basis for agency drawdown guidance in terms
of date on which to request funds based on expenditures. Treasury will continue
to monitor agency drawdowns and work with those agencies that consistently draw
funds later than required. The contact person is Rachel Miller, Deputy State
Treasurer. The anticipated completion date is December 31, 2002.

Overview of the Office of the Inspector General

Office of Audit

The Office of Audit (OA) conducts comprehensive financial and performance audits
of the Social Security Administration's (SSA) programs and makes recommendations
to ensure that program objectives are achieved effectively and efficiently.
Financial audits, required by the Chief Financial Officers' Act of 1990, assess
whether SSA's financial statements fairly present the Agency's financial position,
results of operations and cash flow. Performance audits review the economy,
efficiency and effectiveness of SSA's programs. OA also conducts short-term
management and program evaluations focused on issues of concern to SSA, Congress
and the general public. Evaluations often focus on identifying and recommending
ways to prevent and minimize program fraud and inefficiency, rather than detecting
problems after they occur.

Office of Executive Operations

The Office of Executive Operations (OEO) supports the Office of the Inspector
General (OIG) by providing information resource management; systems security;
and the coordination of budget, procurement, telecommunications, facilities
and equipment, and human resources. In addition, this office is the focal point
for the OIG's strategic planning function and the development and implementation
of performance measures required by the Government Performance and Results Act.
OEO is also responsible for performing internal reviews to ensure that OIG offices
nationwide hold themselves to the same rigorous standards that we expect from
SSA, as well as conducting investigations of OIG employees, when necessary.
Finally, OEO administers OIG's public affairs, media, and interagency activities,
coordinates responses to Congressional requests for information, and also communicates
OIG's planned and current activities and their results to the Commissioner and
Congress.

Office of Investigations

The Office of Investigations (OI) conducts and coordinates investigative activity
related to fraud, waste, abuse, and mismanagement of SSA programs and operations.
This includes wrongdoing by applicants, beneficiaries, contractors, physicians,
interpreters, representative payees, third parties, and by SSA employees in
the performance of their duties. OI also conducts joint investigations with
other Federal, State, and local law enforcement agencies.

Counsel to the Inspector General

The Counsel to the Inspector General provides legal advice and counsel to the
Inspector General on various matters, including: 1) statutes, regulations, legislation,
and policy directives governing the administration of SSA's programs; 2) investigative
procedures and techniques; and 3) legal implications and conclusions to be drawn
from audit and investigative material produced by the OIG. The Counsel's office
also administers the civil monetary penalty program.